Dudley v. Fridge
Supreme Court of Alabama
443 So. 2d 1207 (1983)
Bruce Dudley and other landowners (plaintiffs) owned mineral rights subject to an existing lease (the Daws lease) reserving a one-eighth royalty. They granted Harris Anderson (defendant) a one-tenth royalty interest in those minerals, with the royalty deed stating it was "subject to the present [Daws lease], and to be subject to any and all further leases at [the plaintiffs'] option." The plaintiffs later signed a new lease with AMAX Petroleum reserving a more generous one-fourth royalty, superseding the Daws lease. AMAX tried to pay Anderson only one-tenth of the old Daws one-eighth royalty; Anderson argued he was entitled to one-tenth of the new, larger one-fourth AMAX royalty. The trial court agreed with Anderson, and the plaintiffs appealed.
Whether a grantor who has granted a fractional royalty subject to a current lease and to any and all further leases at the grantor's option can withhold from the grantee the benefits of a subsequently executed, more favorable lease.